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Pakistan's power sector plunged deeper into financial turmoil during the last fiscal year, posting a negative equity of Pakistani Rupees (PKR) 800 billion, as shrinking electricity demand, chronic theft and persistent under-recoveries eroded the financial base of distribution companies, according to an official performance review, as reported by The Express Tribune.
According to The Express Tribune, the annual report revealed that the sector's total liabilities surged to PKR 9.2 trillion, far exceeding assets of PKR 8.4 trillion. Officials attributed the widening gap to distribution company losses, electricity theft, costly re-pricing by generation firms, circular debt and a structurally flawed business model. To prevent a complete breakdown, the government injected more than PKR 1 trillion in subsidies during FY2024-25, including PKR 552 billion for distribution companies alone. Despite this massive fiscal support, six out of ten DISCOs remained loss-making, marking a troubling start to the first full fiscal year of Prime Minister Shehbaz Sharif's administration. Only four distribution companies managed to return to profitability, collectively earning PKR 39 billion. Gujranwala Electric Power Company topped the list with PKR 13.6 billion, followed by Tribal Electricity Supply Company at PKR 9.4 billion, largely due to subsidy inflows. Faisalabad Electric Supply Company recorded PKR 9.6 billion after improving collections, while Multan Electric Power Company posted PKR 4.5 billion, although theft remains a concern. In contrast, the remaining six DISCOs posted combined losses of PKR 258 billion last year. Their cumulative losses have now ballooned to PKR 3 trillion, nearly half of the total losses incurred by Pakistan's top 25 state-owned enterprises. Quetta Electric Supply Company emerged as the second-biggest loss-maker after the National Highway Authority, with PKR 113 billion in annual losses and cumulative deficits of PKR 825 billion, driven by weak recoveries and rampant theft. Sector revenues also declined to PKR 3.9 trillion, a drop of PKR 181 billion, as tariff delays and circular debt squeezed cash flows, as cited by The Express Tribune. The worsening health of state-owned enterprises has forced successive governments to hike electricity tariffs and impose a PKR 3.23 per unit surcharge, pushing power prices to record regional highs. Finance Minister Muhammad Aurangzeb acknowledged this week that soaring energy costs and taxes were driving foreign investors away, as reported by The Express Tribune. (ANI)
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